Rent control sometimes benefiting the rich

ON SAN FRANCISCO

Published 4:00 am, Saturday, June 16, 2012

Well-to-do people are taking advantage of the city's long-protected practice of limiting rent increases to preserve affordable housing by using their cheap apartments as weekend getaways.

Attorney Andrew Zacks represents landlords who work with the city to push out these cheaters. He says these tenants are cynically playing the system.

"You have this class of very rich, elite people benefiting from rent control," he said. "They have a good deal on a $500 or $800 place on Nob Hill and they use it as a pied-a-terre when they come into the city."

LATEST SFGATE VIDEOS

"It drove me nuts," she said. "It was four doctors and their wives. They traded off on the weekends and used it to go to the Symphony."

Their co-op was disbanded after a 2001 law was passed that allows landlords to file a petition giving them the right to attempt to prove that the tenant is not a full-time resident.

Wolf feels the law is working and points to a decline in the number of cases heard. The first year there were 93, and the last couple of years it has averaged below 20.

Low-hanging fruit

But Zacks believes the law is only partially effective.

"The fact that the number of petitions have gone down is because the easy ones have been caught," he said. "There are certainly a lot of people working hard to protect their rent-control unit, particularly in large buildings where it is harder to prove. I think it is very widespread."

The suits are notoriously tricky, turning on the exact definition of what it means to be a full-time resident. Tenants may be away for months, caring for a sick relative, or on an extended business assignment. Or so they say.

New says that when the law was enacted a certain percentage of renters said, "OK, you caught me," and moved out. But not all of them. Because it is both expensive and difficult to prove residency, some renters think it is worth a fight.

"The burden of proof is on the landlord," said Zacks. "We almost always hire a private investigator, which costs several thousand dollars."

As an example, Zacks has a case that involves a couple who own a condominium in Hawaii and have enrolled their children in school there, but wanted rent protection for a single-family residence in the Richmond District that they have rented since 1987. The landlord, who felt he had evidence the two were living full-time in Hawaii, wanted to increase the rent by $1,500 a month to $3,600.

Zacks' client won the case, but only after two appeals, $50,000 in legal costs and four years of wrangling.

Challenging the law

And it isn't over. The couple filed a challenge to the 2001 petition law in Superior Court. Their suit argues that the Rent Board does not have the authority to rule on eligibility for rent control status because it is "beyond the power of the Rent Board to enact regulations."

This is not an academic argument. Buildings built after 1979 are not subject to rent control, but there are still more than 183,500 rent-controlled units, Wolf said. In a city of 222,165 apartments - which house 65 percent of the population, according to the 2010 Census - this is a volatile issue.

Zacks, and many landlords, would argue that the rent-control cheats are not only failing to pay their fair share, but they are also holding down the number of available rentals.

"People are hoarding the units," he said. "You have these beautiful homes being used for storage."

Or to turn a profit. As documented in a Chronicle story on Sunday, the recent influx of travel sites like Airbnb, which allow people to rent out units for short periods of time, can allow these renters to both get a place at a bargain rate and make money.

New says the experience can be surreal for rental property owners.

"We have had cases where our owners go on the sites and see their own buildings, renting for more than they are getting," she said. "They are gaming the system and getting away with it."

That's aggravating. But, Zacks says, imagine what it is like to be giving tenants a break on the rent and then finding out they are renting the place out for a profit.

The situation is so out of whack it has accomplished the nearly impossible - some people are actually feeling sorry for landlords.

Latest from the SFGATE homepage:

Click below for the top news from around the Bay Area and beyond. Sign up for our newsletters to be the first to learn about breaking news and more. Go to 'Sign In' and 'Manage Profile' at the top of the page.